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By John Helmer, Moscow

Desperate measures by South Africa’s President Jacob Zuma this week sharpened the focus on what the Russian state company Rosgeologia (Rosgeo) and state banks, VTB and Gazprombank, are doing to arrange a $400 million contract for a new gasfield off the South African coast – and pipe promises of billion-dollar royalty payments to a group of the president’s associates, as they prepare for December’s balloting on the presidential succession to Zuma. Keeping themselves in cash from the Kremlin is an interpretation of yesterday’s cabinet reshuffle —  the second this year — which has followed in the South African press from Zuma critics inside the ruling African National Congress (ANC), as well as from opposition parties.

In an announcement broadcast on Tuesday morning, Zuma made six major changes in his cabinet, replacing critics and waverers with super-loyalists.  Read the details here.   Zuma has eliminated his lead critic on the left, the South African Communist Party’s general secretary, Blade Nzimande;  he was Minister of Higher Education. A party statement after his removal said Communist Party backing for the ANC was “on the brink of disintegration”. Zuma was responsible, the statement added, for “the malady of corruption, governance decay and state capture”.



Left: As SA’s intelligence and security chief David Mahlobo (on Zuma’s left) accompanies the president on most of his travels, an unusual chore for a cabinet minister. Right: Mahlobo meeting President Vladimir Putin in Moscow on May 26, 2015. For details of the unprecedented Kremlin meeting with  national security advisors from the BRICS governments, read this.  

The Zuma attempt to capture Russian financial backing was revealed in the move of David Mahlobo to become the new Minister of Energy.   Mahlobo, a traditional chieftain’s son, has run the SA intelligence service since 2014 as a hatchet operation against Zuma’s enemies. In 2015 his ministry’s files were leaked to the media by a foreign intelligence service, exposing the identities of foreign government agents operating in SA, SA intelligence briefs, and the extent of foreign penetration and bribery of Mahlobo’s predecessors and subordinates. For details, click

This August Mahlobo introduced two Zuma front-men in Moscow as part of a new scheme to draw Russian financing into the Zuma group, and their battle to take the presidential succession from rivals. That story was reported in the SA press here.   Rosgeo, the state-owned geological prospecting enterprise run by three foreign service officers, played host to Mahlobo’s proteges; for details, read this

Two older schemes, one for a Russian deal worth $320 million for the sale and purchase of the Highveld Steel company, and its successor, a $50 billion Rosatom contract  to build nuclear reactors in SA, have been defeated by opposition inside the SA government and in the SA High Court.

Russian oligarchs who have been intermediaries in the dealmaking so far include Roman Abramovich (pictured below, left) and Vladimir Yevtushenkov (centre). One of Zuma’s sons, Duduzane (right), was the president’s go-between with Yevtushenkov. A daughter of Zuma’s has been reported at the Energy Ministry as one of the go-betweens in the Rosgeo deal.

SA and Russian sources understand the Russian effort is contesting secret and expensive US, French, British, Chinese, and Israeli schemes to back anti-Zuma factions in the succession. In that contest, George Soros-financed media in the SA are playing  the role they play elsewhere.  According to this report,  Mahlobo’s tenure in the intelligence job “coincided with a growing paranoia in Zuma circles around regime change.” The story of the anti-Russian operations in SA has yet to be reported.

The Rosgeo contract with SA state oil and gas company PetroSA, was valued on last month’s signing at about $400 million, to be spent on seabed drilling and installation of rigs and seabed pipelines over  two years. Once the flow of gas commences at an estimated 4 million cubic metres per day, Rosgeo would become the operator of a gasfield and pipeline network to shore. Over time the reserves of gas to be lifted from the field and pumped ashore may be worth $350 million annually, $80 billion over the field’s lifetime.  The Zuma faction appears to have an undertaking from Rosgeo for a 35% shareholding in the gasfield and cashflow.  Mahlobo’s reassignment to the energy ministry puts him directly in charge of the business.

For the time being, SA journalists and their sources in the ANC think Mahlobo will try to overcome the High Court veto of the Rosatom deal.  “The new nuclear build programme is likely to be a top priority for Mahlobo,” according to Business Day.   High Court action in Cape Town cancelled the Rosatom contract, making the Rosgeo deal more likely. The latter will shortly go for review to the Supreme Court of Appeal.

Listen as the Rosgeo case is discussed in this interview with Michael Avery  on Classic FM Radio,  Johannesburg, broadcast on Tuesday evening.

Click on the podcast, scroll down to Segment 6, and the interview follows.  

Avery hosts the daily radio programme, Classic Business Tonight, the leading business news radio broadcast in South Africa. The programme archive can be listened to here

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